Kyle Corporation is comparing two different capital

structures, an all-equity plan (Plan I) and a levered plan (Plan II). Under Plan I,

the company would have 300,000 shares of stock outstanding. Under Plan II,

there would be 210,000 shares of stock outstanding and $2,367,000 in debt

outstanding. The interest rate on the debt is 10 percent, and there are no taxes.

a. If EBIT is $600,000, which plan will result in the higher EPS?

b. If EBIT is $900,000, which plan will result in the higher EPS?

c. What is the break-even EBIT?